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Positive longer-term performance, despite short-term impacts
June 2022
The war in Ukraine, rising costs of living, rising interest rates and the continued effects of COVID-19, brought about considerable volatility in investment markets this financial year. This volatility affected the short-term returns of most of the asset classes that members are invested in.
Despite this, over the longer-term, our OneAnswer Index investment options have shown to deliver positive long-term performance.
Below, we take a look at member returns for the financial year to end 30 June 2022. We also look at what’s ahead for investment markets and the steps we’re taking to protect and grow your super over the long-term.
ONEANSWER PERFORMANCE
Returns moderate across growth and defensive assets*
OneAnswer Frontier Personal Super Returns
FY22 In Review
The year to 30 June 2022 delivered unprecedented and challenging market conditions. Across the globe we continued to fight Covid with its various strains such as Delta and Omicron. Then there is the war in Ukraine that commenced in late February, which has been felt across the globe through increased prices for everything from oil and gas, to food.
All of this has meant that inflation, which is a measure of price rises in an economy, has risen to levels not seen for decades. In early May, the Reserve Bank of Australia lifted the cash rate for the first time in over 11 years, ending the era of super low interest rates and hoping to apply brakes to consumer spending to restrain price increases and inflation more broadly.
The market response to these extraordinary global events can be seen distinctly in the returns of Australian and international shares for the financial year. The ASX 200 fell by -6.5%, the sixth worst financial year going back to 1983. While the S&P 500 was down -21% for the year to 30 June 2022.
This unprecedented investment market volatility affected the returns of most of the asset classes that members are invested in. In the short-term, returns over the one year to 30 June 2022 have all been negative in the suite of diversified index funds.
Over the longer-term, all OneAnswer Index options have delivered positive performance. The Growth and High Growth Index options, which have a higher allocation to growth assets, such as shares, returned 5.01% and 6.34% respectively over the five-years to end 30 June 2022. While our more defensive asset-based options, the Conservative and Balanced Index options, returned 2.25% and 3.58% respectively over the same five-year period.
Investment Option | 1 year | 3 years (p.a.) | 5 years (p.a.) |
Conservative Index | -7.94 | 0.11 | 2.25 |
Balanced Index | -8.45 | 1.28 | 3.58 |
Growth Index | -8.09 | 2.76 | 5.01 |
High Growth Index | -7.77 | 4.13 | 6.34 |
*The performance information provided above is for OneAnswer Frontier Personal Super to 30 June 2022. Past performance is not indicative of future performance. The future value of investments may rise and fall with changes in the market. Returns quoted use the unit price which is calculated using the asset values for the relevant month end. Please note that all returns are after the deduction of management fees and expenses, and assume all distributions are re-invested.
Looking ahead
The troubling trio of rising inflation, higher interest rates and the war in Ukraine is providing a more challenging investing climate this calendar year. Inflation has moved to multi-decade highs around the world, and central banks with inflation targets are now compelled to rapidly raise interest rates to cool these pricing pressures.
As investment markets adapt to these economic changes, the OnePath investment team are taking steps to reduce the risk in the portfolio. We have been reducing our exposure to international shares, in favour of increasing our exposure across all our options to more defensive assets such as unlisted infrastructure and alternative assets. These assets generally have uncorrelated returns to shares and traditional fixed income investments, and can offer attractive returns during times of share market volatility.
When it comes to your super, the key thing to remember is to look past short-term market movements and consider your super as a long-term investment. For instance, while down over the past financial year, total returns on shares have risen by around 8.5% per annum over the past five years.
While markets will likely continue to be volatile over the short-term, and returns challenged as interest rates continue to rise, we remain focused on our disciplined strategy to deliver over the longer-term.
“We understand it has been a very challenging and uncertain time for many investors, but we remain committed to helping you achieve financial wellbeing. Markets have proven time and again that they can deliver over the long-term and we believe that a well-diversified and well-managed portfolio is the best way to generate consistent returns,” said OnePath Portfolio Manager, Liam Wilson.
To view your investment mix and check on the latest performance of your portfolio, log into your account or register for access on My OnePath
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This article is issued by OnePath Custodians Pty Limited (OnePath Custodians) ABN 12 008 508 496, RSE L0000673, AFSL 238346 and OnePath Funds Management Limited (OnePath Funds Management) ABN 21 003 002 800, AFSL 238342. OnePath Custodians and OnePath Funds Management are part of the Insignia Financial Group of companies, consisting of Insignia Financial Limited ABN 49 100 103 722 and its related bodies corporate (Insignia Financial Group).
You should read the relevant Financial Services Guide (FSG), PDS, TMD, Additional Information Guide (AIG), Investment Funds Guide (IFG), and product and other updates (for open and closed products) available at onepath.com.au and consider whether OnePath products are right for you before making a decision to acquire, or to continue to hold any OnePath product. Alternatively, you can request a copy of this information by calling Customer Services on 133 665.
Taxation law is complex, and this information has been prepared as a guide only and does not represent taxation advice. Please see your tax adviser for independent taxation advice.
Before re-directing your super or moving your money into your product, you will need to consider whether there are any adverse consequences for you, including loss of benefits (e.g. insurance cover), investment options and performance, functionality, increase in investment risks and where your future employer contributions will be paid. Any investment is subject to investment risk, including possible repayment delays and loss of income and principal invested. Returns can go up and down. Past performance is not indicative of future performance.
The information provided is of a general nature and does not take into account your personal needs, financial circumstances or objectives. Before acting on this information, you should consider the appropriateness of the information, having regard to your needs, financial circumstances or objectives. The case studies used in the articles on this website are hypothetical and are not meant to illustrate the circumstances of any particular individual. Opinions expressed in this document are those of the authors only.